Cotton futures slide to Rs 19,200 per bale on November 2 as participants trimmed their positions as seen from open interest. Cotton futures in the domestic market declined 3.38 percent last week on the MCX.
Cotton prices were pressured on the downside by the steep fall in ICE Cotton futures last week.
Mohit Vyas, Analyst at Kotak Securities said, ”Apart from weakness in international cotton prices, increasing demand in the physical market and falling demand by domestic miller after stark rally since past many months have also kept Cotton prices under check last week.”
Volumes are way too lower in near and next month contract, making it difficult to identify a trend in the underlying, he said.
According to Agmarknet data, Cotton arrivals across the country in October reached nearly 3.07 lakh tons, which is more than four-fold higher than last month.
In the futures market, cotton for November delivery touched an intraday high of Rs 19,370 and an intraday low of Rs 19,110 per bale on the MCX. So far in the current series, the commodity has touched a low of Rs 16,440 and a high of Rs 20,150.
Cotton futures for October delivery fell Rs 230, or 1.18 percent, to Rs 19,200 per bale at 14:53 hours IST on a business turnover of 969 lots. The same for December contract slipped Rs 260, or 1.33 percent at Rs 19,250 per bale with a business volume of 56 lots.
The value of November and December’s contracts traded so far is Rs 26.94 crore and Rs 1.69 crore respectively.
MCX Cotton has been trading in an upward sloping price channel indicating strength in the prices of the commodity. The counter is likely to continue its bull run in the short-term period. On the lower side, strong support is placed at Rs 19,000 while resistance is placed in the range of Rs 19,300-19,350 levels, said Motilal Oswal.
The 14-period Relative Strength Index (RSI) is sustaining above the mid-level of 50 indicating strength in the prices of the commodity. The brokerage firm advised buy on dips targeting higher resistance of Rs 20,000-20,500 zone with a stop loss below Rs 19,000 level.
At 09:30 (GMT), US Cotton futures were down 1.06 percent quoting at US cent 68.19/pound on Intercontinental Exchange (ICE).For all commodities related news, click here